June 13, 2017

Roots of the Paris Agreement Part III: Ken Lay and Enron

June 13, 2017

“I am writing to urge you to attend the upcoming United Nations Conference on Environment and Development [‘Earth Summit’] scheduled for early June in Brazil and to support the concept of establishing a reasonable, non-binding, stabilization level of carbon dioxide and other greenhouse gas emissions.”

“The United States fully intends to be the world’s preeminent leader in protecting the global environment. Environmental protection makes growth sustainable…. [This] recognition … by leaders from around the world is the central accomplishment of this important [United Nations] Rio Conference.”

With more than a half-dozen profit centers aligned with carbon dioxide (CO2) regulation, Ken Lay was more than just active in promoting the global warming agenda. Enron was “the company most responsible for sparking off the greenhouse civil war in the hydrocarbon business,” stated Greenpeace-ex Jeremy Leggett (p. 204).

With the Paris pullout just last week, President Trump’s American First policy could also be labeled an Enron Last policy.

Cronyism in Action

The Trump administration’s decision to exit Paris starkly reverses the U.S.-side climate activism that Enron (1986–2001) crucially pushed. When the issue first emerged in 1988, Ken Lay promoted government rationed (priced) CO2 emissions that would advantage natural gas at the expense of coal. (Gas emitted about half-as-much CO2 as did coal.)

It was Lay who spearheaded the formation of the business lobby group, the Business Council for a Sustainable Energy Future (1992), bringing natural gas interests to join environmental leaders. Today, the (renamed) Business Council for Sustainable Energy is run by a former Enron climate lobbyist, Lisa Jacobson.

The Rio Earth Summit’s Agenda 21 called for the international community to take a “more integrated approach to decision making… to facilitate the integrated consideration of social, economic and environmental issues” for sustainability. The next year, President Clinton created the President’s Council on Sustainable Development (PCSD) to “develop and recommend to the President a national sustainable development action strategy that will foster economic vitality.”

Ken Lay was one of three energy CEOs appointed to the 25-member PCSD. The rest of the group was Environmental Left, with administration officials and such pressure-group leaders such as Fred Krupp (Environmental Defense Fund) and John Adams (Natural Resources Defense Council). Lay would have Clinton’s ear, just as he had the elder President Bush’s.

Enron at Kyoto

Enron’s push for CO2 rationing only grew when the company entered the solar business in 1995 and the wind-power business two years later. It was Enron’s climate lobbyist who reported from Kyoto in late 1997 that the new agreement was “a victory for us” and “good for Enron stock!” Specifically, in the words of John Palmisano:

If implemented, this agreement will do more to promote Enron’s business than will almost any other regulatory initiative outside of restructuring of the energy and natural gas industries in Europe and the United States. The potential to add incremental gas sales, and additional demand for renewable technology is enormous. In addition, a carbon emissions trading system will be developed. While the trading system will be implemented by 2008, I am sure that reductions will begin to trade within 1–2 years. Finally, Enron has immediate business opportunities which derive directly from this agreement.

Moreover:

Through our involvement with the climate change initiatives, Enron now has excellent credentials with many “green” interests including Greenpeace, WWF, NRDC, GermanWatch, the US Climate Action Network, the European Climate Action Network, Ozone Action, WRI, and Worldwatch. This position should be increasingly cultivated and capitalized on (monetized).

Where It Began: Earth Summit (1992)

The beginning of Kyoto (and Paris) emerged from the mid-1992 ‘Earth Summit” in Rio de Janeiro, where George H. W. Bush signed the Framework Convention on Climate Change Treaty. The Senate unanimously ratified the treaty, on the basis that the greenhouse-gas (GHG) reduction goals were voluntary, not mandatory.

In April 1992, a few months ahead of the scheduled Earth Summit in Rio de Janeiro, Enron’s chairman wrote a three-page, carefully orchestrated letter to George H. W. Bush. Lay’s letter makes a seemingly benign case for finding the middle ground and endorsing voluntary CO2 restrictions. But as classical liberals and many conservatives knew, this would be a beachhead for the climate/forced-energy-transformation issue, one that would surely grow and grow in predictable and unpredictable ways. (It did.)

Here are some key excepts from Lay’s letter (which was cc’d to two pro-Summit Bush advisors, Clayton Yeutter and C. Boyden Gray):

Dear Mr. President:

I am writing to urge you to attend the upcoming United Nations Conference on Environment and Development scheduled for early June in Brazil and to support the concept of establishing a reasonable, non-binding, stabilization level of carbon dioxide and other greenhouse gas emissions.

This stabilization level should serve as a useful public policy guide, not a policy mandate. Moreover, I believe a market-based policy approach is the most cost effective and environmentally beneficial method to achieve greenhouse gas stabilization.

The demagoguery on both sides of this issue has been extraordinarily fierce. Frankly, I do not believe the oceans will boil in a few years if we don’t address greenhouse gas emissions, but I also do not believe the U.S. will suffer from economic ruin if prudent steps are taken to reduce CO2 emissions in order to protect the global environment. In fact, if pursued through market-based policies, a reduction in greenhouse gases should result in a cleaner environment, cheaper electricity, and more American jobs.

Among other industries, I am convinced that America’s hard-pressed domestic natural gas industry would benefit substantially from a market-based approach to reducing CO2 emissions. Natural gas is our cleanest fossil fuel and through its increased use in electric power generation could play a major role in reducing CO2 emissions and delivering lower electricity prices to consumers….

In summary, I urge you to provide leadership on this important global environmental issue. Not only will many U.S. industries benefit from measures to reduce greenhouse gas emissions, including the natural gas industry, but with the appropriate market-based policies, the measures will result in a cleaner environment, cheaper electricity, more American jobs, and a reduced trade deficit.

Sincerely, Ken

Bush went and spoke. Although environmental pressure groups wanted more, the president gave the global-climate negotiations a beachhead. “The United States fully intends to be the world’s preeminent leader in protecting the global environment,” he stated. “Environmental protection makes growth sustainable [as recognized] … by leaders from around the world [at] … this important Rio Conference.”

Conclusion

While closely associated with both Bush administrations, Lay was ideologically closer to another political figure on the issue of climate change. Lay said: “In Earth in the Balance, Senator Al Gore stated: ‘Higher taxes on fossil fuels … is one of the logical first steps in changing our policies in a manner consistent with a more responsible approach to the environment.’ I agree” (Lay 2000).

The Paris climate agreement, indeed, has roots in Ken Lay and Enron Corp.